Although in the past decade, Ethiopia has shown fast economic growth and solid progress in reaching most of the MDGs, it remains ranked among the poorest and least developed countries in the world. In the 2011 Human Development Index, Ethiopia ranked 174 out of 187 countries. Its challenges include chronic food insecurity, a rapidly growing population, environmental pressures exacerbated by climate change, a small industrial base, and a range of governance issues. In the Horn of Africa, Ethiopia plays in important role in the prospects for regional stability, cooperation and integration. It is at the origin of important regional water flows and increasingly links up with its neighbours in terms of energy and transport connections.
The current EU cooperation strategy is designed to support the Ethiopian Government's efforts in achieving the MDGs through faster and sustained economic development, stressing regional integration and strengthening governance.
Progress towards the MDGs and economic development in Ethiopia can be accelerated by supporting the expansion of basic services, and by fostering economic transformation that enhances competitiveness and regional integration. Therefore the EU current 10th EDF cooperation strategy with Ethiopia, as presented in the Country Strategy Paper for Ethiopia (2008-2013) , is built around three focal sectors: (i) transport and regional integration; (ii) rural development and food security, and; (iii) economic support and governance. In line with this orientation, a large part of the € 644 million national cooperation envelope is allocated to three large programmes:
- The Productive Safety Net Programme (PSNP) that provides predictable cash and/or food transfers to the most food insecure population groups in return for participation in public works programmes;
- The Roads Sector Development Programme (RSDP) that aims to improve the coverage and quality of roads infrastructure in the country; and
- The programme for the Protection of Basic Services (PBS) that allows for the expansion and functioning of key basic services (health, education, water supply, agricultural extension and rural roads) at decentralised levels.
Ethiopia also benefits from various other EU assistance initiatives, including the Energy Facility, the Water Facility, the Food Facility, the Instrument for Stability, the Global Climate Change Alliance and the Instrument for Democracy and Human Rights. In combination, these programmes provide for a broad cooperation portfolio and an average annual assistance value of approximately € 160 million.
European cooperation with Ethiopia dates back to 1975 when Ethiopia became a party to the Lomé Convention. Over the years, Ethiopia has been one of the larger beneficiaries of EC support among the ACP states. The assistance has taken several forms. The several European Development Funds have contributed most to this assistance (total EDF € 1.3 billion), both in the form of programmable resources (National Indicative Plan) and non-programmable resources (mainly Stabex and Structural Adjustment Facility). Very substantial assistance has also been provided in the form of food security.
In terms of programmable assistance, infrastructure (water, energy and roads) has featured as an important orientation in EU-Ethiopia cooperation. This was supplemented in the 1980s by projects to increase agricultural exports (coffee and cotton) and later by integrated rural development programmes. In the 1990s, a gradual shift occurred whereby rural development/food security was combined with assistance to road transport as well as social sectors and economic support.
EU assistance has contributed to improving the living conditions and economic infrastructure in Ethiopia, as illustrated by two examples. (1) EU involvement has been important in changing the annual ad hoc emergency food aid system to a predictable transfer system that enables on average more than 7 million people to not only to survive but also to maintain their livelihoods. (2) Between 1997 and 2011, the road network more than doubled in length, while the proportion of the road network in good condition increased from 22% to 57%.
Other sources of information
More information on EU relations with Ethiopia is available on the pages of the Delegation of the European Union to Ethiopia, which is also responsible for co-operation activities in the country, while the website of the European Investment Bank provides information on EIB-financed projects.